1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Julli [10]
3 years ago
7

Mountain Teas wants to raise $14.9 million to open a new production facility. The company estimates the issue costs for legal an

d accounting fees will be $582,000. The underwriters have set the stock price at $27.50 a share and the underwriting spread at 8.15 percent. How many shares of stock must be sold to meet this cash need?
Business
1 answer:
ololo11 [35]3 years ago
8 0

Answer:

612,936 shares

Explanation:

The computation of the number of shares of stock must be sold is shown below:

Before that we have to compute

Required sales proceeds net of spread is

= (Raise amount + estimated cost for  legal and accounting fees) ÷ (1 - spread rate)

= ($14.9 million + $582,000) ÷ (1 - 0.0815)

= ($1,5482,000) ÷ (1 - 0.0815)

= $16,855,743.06

So, shares to be sold is

= $16,855,743.06 ÷ $27.50

= 612,936 shares

You might be interested in
The p/e ratio can be interpreted as ""the number of years’ earnings to pay back purchase price"" True or False
ICE Princess25 [194]

Answer:

True

Explanation:

P/E ratio is the price to earning ratio. Investor look into this ratio before investing or buying share of the company as it shows the market value of the shares or demand of the shares in the market. If ratio is higher then investor anticipate the growth of the company´s earning in the future, it also show investors are willing to pay higher price for each dollar earning of the company.

Price earning ratio= \frac{market\ value\ price\ per\ share}{earning\ per\ share}

7 0
3 years ago
Firms may invest in fewer projects as a result of A. an increase in interest rates that increase economic growth. B. an increase
kupik [55]

Answer: B. an increase in interest rates that decrease economic growth.

Explanation:

If interest rates were to rise in an Economy, that would mean that the cost of borrowing just rose. The rise in the Cost of Borrowing reduces consumer spending as well as business investment. This will therefore lead to a lower Aggregate demand. A lower AD in the Economy usually leads to a decrease in economic growth.

Now, if such things were to happen, a firm may definitely invest in fewer projects because first off it will be more expensive for them to borrow and invest because of the high rates. They will also be discouraged because of the Decrease in economic growth as the chances of their projects doing well will be drop in a depreciating economy.

7 0
3 years ago
Is 40 a prime number​
Nat2105 [25]

Answer: No, 40 is a composite number. :)

Explanation:

8 0
3 years ago
What is a disadvantage about buying a home?
lisabon 2012 [21]

Answer:

c. you need a lot of money to buy a home

Explanation:

mark me brainliest pl

hope it help you

8 0
2 years ago
Read 2 more answers
Bacchus Enterprises has $12B in book value of common stock selling at a book to market rate of 1.35 and a beta of 1.5. The combi
goldfiish [28.3K]

Answer: 16.3%

Explanation:

Given the details in the question, the cost of preferred capital can be calculated using the CAPM method.

Cost of preferred stock using the Capital Asset Pricing Model is:

= Risk free rate + Beta * ( Market return - Risk free rate)

= 4% + 1.23 * (14% - 4%)

= 16.3%

7 0
3 years ago
Other questions:
  • What is the primary function of financial institutions in the economy?
    8·1 answer
  • Sturtevant provided genetic evidence for the existence of four pairs of chromosomes in Drosophila in which of these ways?
    15·1 answer
  • ___________ is a phenomenon in which the project manager spends more time documenting project tasks, collecting performance meas
    7·1 answer
  • Jorge and Fred have a product they would like to sell. They decide to share the risks and profits by forming an unincorporated b
    10·2 answers
  • BMW Group, one of Europe's largest manufacturers, reports the following income statement accounts for the year ended December 31
    5·1 answer
  • The government of Ugania had been extending huge amounts of loans to the business enterprises in the country. However, the borro
    13·1 answer
  • At year-end, the perpetual inventory records of Anderson Co. indicate 60 units of a particular product in inventory, acquired at
    12·1 answer
  • RJ Custom Bike Manufacturing has determined that the demand for the products and services offered by them is less elastic. With
    11·1 answer
  • The inflation rate is measured by calculating the percentage change in the consumer price index. True or False
    15·1 answer
  • 11.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!